Transcript Final Application Training

Final Application Best
Practices
Section 523 Self-Help Housing
Technical Assistance
Prepared by NCALL Research
October 2007, last updated 3/09
Throughout this slide
presentation, NCALL’s
recommended “best practices”
will be notated with a *BP.
Free Template from
www.brainybetty.com
2
A. Introduction
What Now?
You should have:
 An approved Pre-application (need and
capacity exists)
 First group of participants ready to
close their loans
 House and site plans (approved by RD)
 Cost estimates
 Land
 Prepared staff
*BP
By the time the Final Application is approved
you should be one month away from
beginning construction on the homes.

Allow 6 months to complete Final
Application
What’s Covered?


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Items needed for Final Application
Helpful tips on accomplishing these
items
Some things to do while grant is getting
approved
RD’s Expectations from grantees:
 Operate within RD’s regulations
 Carry out the responsibilities of the Grant
Agreement including:
 Recruiting low and very-low income applicants
and applicants from substandard housing
 Building the number of homes proposed
 Building the houses in a timely manner
 Keeping program costs within the required
limit
 Ensuring that participants work on each others’
homes
 Setting up an acceptable accounting system

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A working relationship with Rural
Development is critical
NCALL is available throughout the
process
*BP Use NCALL as a resource
ANYTIME assistance is needed!
B. Final Application
Format
Required Format

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The format of the application is very
important
Rural Development requires that
the information be in a specific order
A three-ring binder with table of
contents and tabbed sections must
be included
Tabs must correspond with item
numbers on RD checklist
*BP
An organization can drastically reduce
its chances of error by having someone that
did not put the Final Application together
recheck the Final Application for completion
and accuracy before copying and mailing it
to Rural Development.
Application Processing
Through Grant Closing
Checklist (RD AN 4387)


RD’s checklist
Refer to the Final Application
Manual for actual checklist
NCALL’s Final Application
Review Checklist



Checklist NCALL uses to review
applications
It is has more detail and will help
with assembling the application and
meeting all of the requirements
See Guide for actual checklist
1. Standard Form 424,
version 2

Standard Form 424, v. 2,
“Application for Federal Assistance”
and Intergovernmental Review
Response 1994.410 (e)


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First thing that reviewers see, sample in
Manual
Provides RD will all of the pertinent
information about the project – how
many homes, time period, area, funding
Must be complete
*BP

There are many outdated or incorrect
forms out there. Use the correct form!
To ensure that you are using the most
recent, accurate form, you can:
1.
2.
Contact the State or Area RD office
Go to www.hudclips.org or NCALL’s
website, www.ncall.org
Intergovernmental
Review



Intergovernmental review
established to foster partnership
through coordination of Federal
funding
Include response from SPOC, may be
on A-95
Not every state has a SPOC, refer to
Guide for list
1b. Survey on Ensuring Equal
Opportunity for Applicants


This form helps to ensure that the
government is fairly distributing
grant funds
Complete this required form and
include it in your application
2. Waiting List of Participants
Waiting list should include:

Information on potential applicants are
interested in participating in the self-help
program
Names, addresses, number of persons in
household and total annual income is required
 Date of initial contact not required but helpful
for marketing & recruitment (See sample form
in Guide)
*BP Aim to have at least twice as many potential
participants as would be needed to complete the
grant

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3. Proof of Qualified
Participants


Proof is required that participants in
the first group have qualified for
assistance or been determined
“eligible” by RD
Proof will be letters from RD
What Has to Happen for DE letters to
be issued:

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Full application must be processed and
reviewed
Household income is verified
Credit history is checked
All other eligibility requirements met
Loan Originator determines payment
subsidy and maximum loan amount
Letter of eligibility is issued

*BP
Include a cover page to this section
 Narrative should include number of
families in the first group, list of
family names, total cost estimates,
total 502 loan amount and other
loan/grant information that will be
used for the participant

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If RD 502 loan does not cover
complete building costs, include
narrative indicating how gap will be
covered
If additional loans, advise RD’s local
office

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Additional debt = increased debt to
income ratios
Proof will be needed that these funds
have been secured
4. Lot Options for First
Group

Land for the first group must be in
control

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Purchase agreements
Copy of deed if owned
Option agreements
Include a narrative identifying
number in first group, how land is
controlled, by whom, when it will be
purchased and where it is located

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Controlling land in a timely manner
is critical
One of the worse things that can
happen is applicants are ready to
build, full-time staff are hired and
subs are scheduled – but there is no
land!

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Often grantees need interim
financing to obtain land
Control land by purchasing or
entering into an option agreement
See sample of Option to Purchase
Real Estate in Guide
Caution!! 523 Grant funds CANNOT
be used to option or purchase land.
5. Evidence of Lot Availability

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Evidence of lot availability for remaining
groups is required
Lists of available lots, maps and prices are
required
Include a narrative summarizing what land
is available, whether site development is
required, timeframe for completion
More information on land is available in
the “Land” section at the end of the
manual
6. House Plans, Specs,
Detailed Cost Estimates

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Certified house plans are required for
EVERY model that will be built
during the grant period
Specifications are required for every
model and for every family in the
first group
Detailed cost estimates are required
House Plans

Certified house plans are required for
EVERY model that will be built
during the grant period

A complete set consists of plans and
blueprints which have been certified by
an architect or engineer licensed in your
state
CERTIFIED!

Blueprints need to include the
following views with mechanicals
noted:
Foundation plan
 Floor plan
 Cross section
 Front and rear elevations
 Right and left side elevations


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Average cost per set is $500-$700
Include a statement of the square
footage of livable space for each plan

Codes and Standards
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Local and state building codes set the
minimum standards
Local authorities can require additional
standards
All house plans must be approved by RD
Research building codes for each location since
requirements may vary
Each plan must conform to state and local
codes and comply with RD’s standards
The dwelling must also be affordable to the
applicant

There are several ways to obtain house
plans:
 Local Building Supplier
 House Plan Book
 Rural Development
 NCALL
 Other Self-Help Providers
 Software – Cheap Architect

Cost of Obtaining House Plans


Take into consideration cost before
committing to the house plans
Remember, it costs on average $500 $700 per set of plans
You owe me $4,200!
YOU

Standardize plans

Limit selections to three basic plans

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Plans can have varying living areas and varying
number of rooms
Cost estimate and use of materials will remain the
same
Construction Supervisor and participants will become
familiar with plans
Try to standardize the cabinet and kitchen
arrangement
House plans should be prepared in advance of
the formation of the first group of participants
Only one set needs to be certified original, the
rest can be copies
Choose plans based on what is in
demand by surveying the target area
and participants’ affordability!!
*BP

After participants choose a particular
house design, copies of the blue
prints go to:
RD in the 502 application
 Local building official when applying
for a building permit
 Construction supervisor
 Participant file in the grantee’s office

Developing
Specifications

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After selecting house plans, develop
a specification sheet
Use Form RD 1924-2, “Description of
Materials”
One spec sheet should be used for
each participant in the first group
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The “Description of Materials” Form 1924-2
can be located at www.rurdev.usda.gov/
regs/forms/1924-02.pdf.
Contact NCALL or the local RD office if you
need assistance
Material identification should be detailed
Attach additional sheets if necessary and
manufacturer’s specification sheets for
equipment and/or special materials
The design must meet RD’s
requirements which include:

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RD’s Thermal Performance Standards
(1924-A, Exhibit D)
RD’s guidelines for affordability
No income producing facilities
No swimming pool
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Inspect every spec sheet for accuracy and
completeness
If questions arise, the specs and plans
submitted to RD will be used by the RD
building inspector
Use the Guide for Inspection of
Construction of Dwellings and Buildings
Construction supervisor responsible for
completing the specs submitted in each
loan application
The State and the RD State Architect must
approve the plans and specifications
Cost Estimates

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One of an agency’s primary
responsibilities is to accurately
estimate the cost of each
participant’s home before it is built
These cost estimates must be
accurate, they eventually become
the participant’s 502 mortgage
Avoid making estimates that are
unrealistically low

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Cost estimates can range from 2% to 3%
over, but never under
Under estimating the cost of construction
may force the participant to seek a second
“subsequent” mortgage
If the costs are overestimated, the
mortgage will be larger than needed and
the participant might not get all of their
deserved “sweat equity”
If there is a significant time
between the time of actual
construction and the time of cost
estimates were obtained, update the
figures to reflect the current market
prices.
*BP
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There are four types of costs:
 Construction materials
 Subcontracted labor
 Land
 Other variable costs
Take-offs help to determine the
quantity and quality of construction
materials required by a house plan
Construction Materials
 To do a take-off, the Construction
Supervisor must:
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Review the drawings of a single house plan
Record the materials that are called for in the
drawings
Once the take-off is completed, you
should have a full listing of all materials
(quantity and quality) required
 To get the best price, get bids on the
materials. Before doing this:
The project must be described in
detail, including material to be used
and quantity
 Outline the time frame in which
materials are needed
 Set a bidding date deadline

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After obtaining the material bids, visit the
supplier
Meet the salesperson
Discuss delivery format, return policy,
service area and inquire about credit
accounts for the participants
Look for discounts for bulk purchases or
get a guarantee on prices in advance
Subcontractors
The subcontracted activities are:
Excavations
Licensed electrical work
Plumbing
 Use Exhibit B-2 of 1944-I as a guide
 The participants’ construction tasks must
equal at least 65% of construction
activities
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When requesting bids, make sure
that you:




Describe the project, materials and
work to be done
Outline the requirements and
anticipated time frames
Make the plans and specs available
Set a bidding deadline date

After obtaining bids:
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Interview the potential subcontractors
Ask for and check client references
View their past jobs
Determine their integrity and timeliness
Get a copy of their license and insurance
coverage – check the expiration date of both
Include the participants in this process,
they will be signing the contracts
Advise the participants, explain benefits
and drawbacks concerning the
subcontractors
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Prepare a construction contract
(samples in the book) and attach the
subcontractor bids
Participants and subcontractors sign
the construction contract
Rural Development’s contract is
preferred
*BP If construction contracts other
than RD’s are to be used, get RD
approval
Land and other variable
costs
 In addition to direct costs, the indirect costs
need to be determined
 Indirect construction costs include:
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Land
Fees (permits, surveys, closing costs, etc)
Appliances and equipment
Site improvements (grading, fences, driveways)
Landscaping
Contingency funds (3-5%)
Rural Development
Parameters

“Officers, employees or
representatives of organization will
not solicit or accept gratuities, favors
or anything of monetary value from
suppliers, contractors or others doing
business with your organization.) –
1944-I, Exhibit A, Paragraph (o)

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“Board members or employees for your
organization shall not directly or indirectly
participate for financial gain in any
transaction involving the organization or
the participants. Includes activities of
selling real estate, building materials,
supplies and services” – 1944-I, Exhibit A,
Paragraph (q)
“While contracts are generally awarded to
the lowest bidder, alternative policies are
common.” – 1924.6 (a)(10) & (11)
Attachment O of OMB Circular
A-110

In addition to some required
application forms, NCALL has
included some forms that may help
in the management of the self-help
program. See Final Application
Manual.
Preparing House Designs
A General Flow of Events
I. Research Building Standards
Determine local building codes
 Determine acceptable RD design

II.Select

House Designs
Have the house designs approved
by RD as early as possible to ensure
they meet RD standards
*BP
Get Plans Certified
IV. Estimate Costs for Each House Design
III.
a.
b.
c.
d.
Prepare material take-offs
Determine which construction jobs to
subcontract
Issue request for bids, evaluate bids, select
suppliers and subcontractors
Issue request for bids, evaluate bids, select
suppliers and subcontractors
V.
Involve Individual Families

Each family selects their lot and house
plan
Prepare House Documents for 502
Dockets
VI.

For each family 502 docket, prepare 
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Detailed house plans and specs
Plot plan
Water/waste disposal system (if
applicable)
Cost estimate
VII. Send Docket to RD for Approval
VIII. Send House Documents to Local Officials
a. Building permit obtained
IX. Construction
Construction Contract

Sample of the RD Construction
Contract, Form RD 1924-6, in Tab 5
or:
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Contact the State or Area RD office
www.rurdev.usda.gov
NCALL’s website, www.ncall.org
Guideline for Purchase of Bidding
Supplies/Soliciting Subcontractors

A guideline will need to be
established (Attachment O–OMB Circular
A-110)

Organizations may use their own
procurement policies and procedures

They must meet the minimum
standards on page 98 in the Guide

See samples in Guide of:
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Cost estimate summary
Construction task matrix
Self-help family time sheets
7. Staffing Needs and
Hiring Schedule
A self-help organization needs:
A
good program
 A sound budget
 A committed Board
 Qualified and motivated staff!
Staffing / Personnel

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Personnel issues include determining
staffing needs, developing job
descriptions, developing personnel policies
and recruiting staff
The regulations require:
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Proposed hiring schedule
Availability of prospective employees
Board’s signed statement that authorizes the
Executive Director to hire the necessary staff
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Rural Development regulations do not
allow nepotism in the self-help program
Individuals that work for a grantee that
are related must disclose the nature of the
relationship
1944-I does not allow relatives working
together in the same line of command
Hiring Schedule
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A hiring schedule should be included
in the Final Application
Include all of the positions that will
be paid out of the self-help housing
grant funds
*BP See page 110 for a sample
Indicate:
 Which positions are filled
 The anticipated hiring date of the
remaining positions
 Which positions will be full-time?
Part-time?
 What percentage of their time will be
charged to the self-help program
Availability of Prospective
Employees

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To prove the existence of potential
candidates, include a resume’ and
letter of commitment from the
candidate
If waiting until grant approval,
include a description of how needed
staff will be located and a brief
report on available personnel in the
area

Identifying the availability of
personnel in the area will require:
 the
number of applications received for
the job advertised
 a narrative describing the expected
hiring process
Job Description

Job descriptions are required, typical staffing
for the self-help program are:
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Executive Director/Project Director:
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Group Coordinator/Loan Packager:
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Works directly with the participants, screens, counseling,
training, helping them fill out the required forms, etc.
Secretary/Bookkeeper:
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Responsible for running and managing the self-help housing
program
Keeps records for 523 grant funds and 502 participant loan
accounts
Construction Supervisor:

Responsible for construction

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See Guide for sample job
descriptions
*BP We recommend that new
grantees use the traditional SH
positions
Rural Development needs to be
notified for prior approval prior to
hiring changes occurring
Salary Ranges and Fringe
Benefits

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Develop salary ranges and fringe
benefits for each position
Both must be justified as being
reasonable in the proposed area
(OMB Circular A-112, Attachment B,
Paragraph 6(2))

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A good salary survey can help
establish fair and competitive rates
*BP See Guide for sample survey
8. Authorized Representative
of Applicant

Provide the name, address and
official position of the applicant’s
representative that is authorized to
act for the applicant and work with
Rural Development
9. Budget Information –
Non Construction
Requirements:
 424-A
 Detailed Budget
 Detailed Budget Narrative
 RD Letter
 Method of TA Cost
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Authorized expenses:
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Personnel salaries
Reasonable office expenses and supplies
Employment benefit costs
Purchase or lease of power tools
Insurance
Reasonable fees for training
Consultant and legal fees
Annual audits
Prohibited use of funds:
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Paying for labor on the houses
Purchasing real estate or building materials for the families
Paying any debts, expenses or costs to the participants
Any lobbying activities prohibited in OMB Circular A-122

424-A
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Budget must be on form SF-424A,
“Budget Information (NonConstruction Programs)
Complete it using the example in the
Guide
See NCALL’s website for the most
recent version

Detailed budget
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Detailed budget narrative
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Include a detailed budget
See sample in Guide
Remember to include funds for NRSHHA dues
Include a detailed budget narrative
See sample in Guide
RD Letter
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Include a letter from RD identifying the
equivalent value of comparable contractor-built
502 homes, less than 12 months
Include total square feet and total living area
Should include the actual or projected cost of
an acceptable site and site development

Method of TA Cost Calculation
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Include the calculation of how the total
grant amount was calculated
Indicate which allowable method was
used
See sample calculation in Guide
10. Indirect or Direct Cost
Requirements

Transmittal Letter

Response

Proposal

Indirect Cost

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Mechanism used by federal government
Recommended when shared costs become
impractical to be charged directly to various
funding sources
Direct Cost Allocation

Used by single funded organizations or those
which can track costs consistently
RD has a contract with Department of
Interior’s National Business Center to
approve cost policies

An approved direct or indirect cost
policy must be submitted


Document the indirect cost rate or the
lack thereof
If a new policy is needed:


Prepare proposal for submission to DOI for
approval and include proposal in application
DOI will not review proposal until grant is
approved
11. Monthly Activities
Schedule


A finalized monthly activity schedule is
necessary
Monthly activities schedules allow for:
Setting specific goals
 Identifying time targets
 Identifying person’s responsible for tasks
 Letting everyone know what he/she is suppose
to do and whether they are on target or not
 Identifying potential problems and
opportunities
 Improving decision-making process
 Focusing on grant activities to results

When planning, estimate a time range
instead of a specific date, this keeps your
schedule more realistic
The four most significant time elements
are:
 *BP

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Duration of each step
Earliest time each step may be started
Latest time each step may be started
Latest time each step may be completed

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It takes everyone’s commitment to
implement the SH project
The activity schedule should not be
created and forgotten
Use it to stay on track
Adjust if necessary
See Guide for samples
12. Personnel Practices and
Procedures

A copy of the most recent personnel
policies is required



Or new policies for a new organization
Must be in compliance with federal,
state and local laws that effect
employees
See Guide for sample personnel
policy

Personnel forms also need to be
included in the application and
should include:


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

Time Sheets
Travel Advance Requests
Mileage Forms
Leave Requests
Employment application
See Guide for sample forms

What are personnel policies?



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A written guide the defines the
relationship between the organization
and the staff
Describes expectations and procedures
Must be thorough, specific and legal as
well as acceptable by RD
Board’s personnel committee should
review the plan
It is strongly recommended that an
attorney versed in labor laws review
the policies. Check your community for
pro bono services to nonprofits.
*BP

How should personnel policies be
written?



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
Keep the sentences short
Avoid complex terms
Drop all unnecessary words
Stay gender-neutral whenever possible
How should personnel policies be used?


To provide guidance to the managers
In an orientation of a new employee

When should it be revised?


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
Review annually and revise as needed
Changes in the laws, regulations,
employee benefits, and other areas may
prompt a review and revision
This responsibility may be given to the
Board’s personnel committee or the
program staff
Ensure that the Board approves them
See Guide for sample policies
13. Authorizing Resolution

A resolution must be adopted by the
Board of Directors:


Authorizing one or more specified
persons are authorized to act on
organization’s behalf
It must state that they are able to:



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Sign the Grant Agreement, 1994-I, Exhibit A
Sign Form RD 400-4 “Assurance Agreement”
Work with RD on the self-help program
Must include authorized person’s name,
title, address
14. Assurance
Agreement



RD Form 400-4
Include a signed copy of this form
Sample form in Guide
15. Fidelity Bond Coverage

Read Subpart C of 7 CFR 3015, deals with
“Bonding and Insurance”





Determine how it applies to you
Review it with a lawyer and accountant
Complete form RD 440-24 “Position
Fidelity Schedule Bond Declarations” to
demonstrate compliance
All staff who have authority to make
purchases, execute contracts or sign
checks should be covered
*BP Amount of the coverage should be at
least equal to the maximum amount of
funds and property the organization will
have at anytime
16. Evidence of Interest Bearing
Checking Account and Statement
of Repayment of Interest


Submit a copy of the account agreement
of your two-signature interest-bearing
checking account
Include a signed statement saying that
the organization will return, on a quarterly
basis, any interest earned in excess of
$250 per year

If the grantee is a public body, interest in
excess of $100 must be repaid.
17. Group Agreement
(including Exhibit B-2)


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
Include a copy of your group agreement
It must include Exhibit B-2, indicating the
breakdown of construction
*BP Each member of the group must read
the document or have the document read
to him/her, thoroughly understand it, and
sign it
*BP The enforcement of the membership
agreement is key to the success of each
group
18. Request for Obligation of
Funds Form RD



Include this completed form, RD
1940-1
At item 45, on the back, have the
authorized representative sign and
date two copies of the form
See Guide for sample
19. Self-Help TA Grant
Agreement

Include a signed, but not dated, copy
of the grant agreement
20. Certification Regarding
Drug Free Workplace


Include a signed and dated AD 1049
See Guide for form
21. Certification Regarding
Debarments


Include a signed and dated AD 1047
See Guide for form
22. Certification Regarding
Lobbying


Include a signed and dated RD 1940Q, Exhibit A-1
See Guide for form
23. Statement of Compliance




Include a statement that the
organization complies with the
requirements of the appropriate 7CFR
7 CFR establishes uniform
requirements for the administration of
grants
The organization’s authorized
representative must sign and date it
See sample letter in Guide
24. Assurances – NonConstruction Programs



Complete SF 424B “Assurances -Non-Construction Programs”
Certifies to Rural Development the
organization’s accounting system is
certifiable by a CPA as meeting the
Grant Agreement
Signed and dated by authorized
representative
25. RD Managers’ or Area
Managers’ Recommendation

Hold a section for this to be added
later by RD
26. T&MA Contractor’s Review
and Recommendation


Hold a section for this to be added
later by RD
Required under National Office
Contract
27. National Office
Review

Hold a section for this to be added
later by RD
C. Putting the Final
Application Together






Use the Rural Development checklist for
order and format
Include a Table of Contents and tab the
sections
*BP Check every page for completeness,
signatures and dates
*BP Send the application to NCALL first for
a draft review
Make 2 copies of the application
Submit applications in an original and one
copy to the designated RD office
D. Monthly
Activities
 *BP
See Guide for a monthly
breakdown of activities to keep on
schedule for completing the
application
E. Grant Closing
and Drawdowns

Request for Advance or Reimbursement,
Form SF-270






Form completed monthly and submitted to the
RDM, original and two copies
Used to notify RD of the grant funds used during
the previous month, the unspent funds on hand,
and the projected need for the next month
Written justification should be forwarded if
amount exceeds the projected need for the next
30 days
Must be in the RDM’s office 15 days prior to the
beginning of the month
If in order, RD will try to have advance check
delivered on the first of the next month
This is normally the only report of grant
expenditures that RD will require during the grant
period

Rural Development can establish an
electronic transfer for the funds


They will need the routing and account
numbers
The first grant draw can be for the
month in which the grant was closed,
the following month and can include
funds for tool and equipment
purchases
F. Land
Land Survey Criteria




Land must be in a rural area
Lot size – can not be subdivided
Roads – contiguous to and must have direct
access to a street, maintained road or
driveway, must be paved or all weather
Water – approved well or public central water
system


*BP
Sewer – approved public sewer or septic
system
 *BP

Public water is preferable
Public sewer is preferable
Site approval – State Director delegate site
approval responsibility to appropriate person
Land Development







Key ingredient to the program
Approach the search in an organized
and systematic manner
Controlling land is critical
Many other activities depend on it
Interim financing may be necessary
523 funds may not be used to option
or purchase land
*BP Contact RD for ideas on where to
look
Land Survey Resources









7CFR Part 3550
1924-A
1924-C
RD Community Development Manager
Health Department
County or City planner, engineer, or city
planner
Soil Conservation Service Soils Book
County Court House, Tax Office, Recorder
of Deeds
Utility Companies
Land Survey Process

Preparing a site search map





Identify land that is completely ineligible
Identify and plot locations with desirable
features
Plot drawbacks
Talk to county governments or local
universities to help with survey process
Windshield survey – review sites for:



Topography, flood plains, erosion
Access to public roads, vegetation, existing
structures
Unique features

Land analysis form





Investigate ownership
Check into tax records
Assume that every parcel is for sale
See Form in Guide
Selecting the site







Assess suitability of the location
Check zoning
Look for community facilities
Make sure it fits RD guidelines
Would you want to live there? Why or why
not?
Assess physical characteristics
Determine acquisition and development costs
Optioning vs. Purchasing

Option agreements





Contract between seller and potential buyer
Buyer not obligated to buy, seller obligated to
sell
Options should be between seller and
participant
See Option language in Guide
Purchasing land




Grantees can purchase land for later resale to
participants
Can be beneficial when purchasing multiple lots
523 funds cannot be spent for this purpose
Interim financing necessary

Interim financing






No single pot of money available
Seller financing may be an option
AHP, CRA, CDBG, HOME, Housing Trust
Funds
HAC
Other private corporations or
foundations
See NCALL’s Funding Sources Guide for
more information
G. Personnel
Issues


There are many personnel issues
that must be handled
*BP See the Guide for helpful
information on:



Developing job descriptions
Creating a salary survey
Interviewing, selecting, and hiring
personnel
The End